Moneybox

The Economic Recovery Is Hitting a Wall

Mitch McConnell, wearing a medical mask, walks down a hallway at the Capitol
Whatcha gonna do Mitch? Saul Loeb/Getty Images

The only silver lining to Friday’s very grim jobs report is that it might—potentially, maybe, just possibly—be ominous enough to make Congress agree on a new relief package, assuming that Senate Majority Leader Mitch McConnell hasn’t been entirely consumed by political nihilism.

Employers added just 245,000 workers to their payrolls in November, the government reported, down from 610,000 the month before, and 711,000 in September. While the official unemployment rate fell slightly to 6.7 percent, that largely reflected Americans dropping out of the labor force, so they were no longer counted among those who were jobless and looking for work. The plunging hiring numbers suggest that the country’s recovery is finally hitting a wall as surging coronavirus cases and cooling weather put a chill on economic activity.

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In just one more sign of long-term danger for the economy, a greater share of job losses are becoming permanent. The “core unemployment rate” calculated by Indeed.com economist Jed Kolko—which excludes temporary layoffs—increased to 6.2 percent in November.

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Total hiring was weighed down a bit because the federal government laid off 93,000 temporary census workers. But even excluding the public sector, the picture was still pretty grisly: Private payrolls increased by just 344,000, down from 877,000 in November. Retailers, restaurants, and bars shed jobs, on a seasonally adjusted basis, suggesting a rough holiday season ahead.

The point is the numbers were bad, and could get worse heading into December, given weather and pandemic conditions. Oh, and remember, unemployment benefits are scheduled to expire for millions of Americans the day after Christmas.

In a sane political environment, this report would serve as an immediate wake-up call to every member of Congress, making it clear that a major relief bill is necessary. Hiring is grinding to a halt as a pandemic rages, and out-of-work Americans are looking at a deep winter without aid. At the same time, unemployment has fallen far enough, and enough businesses have survived up until now, that a major relief package that tides the country over until vaccines are distributed could potentially set us up for a quick recovery in the summer, as long as we don’t backslide into a double-dip recession. At this point, Democrats and many Republicans are on board with a $908 billion compromise plan—smaller than previous compromise packages under discussion, but much, much better than nothing. Whether such a deal passes will likely be up to McConnell, who resisted a large package for months. Will he fight against a bipartisan relief effort now that it’s crystal clear the recovery is going into a freeze? I suppose it’s possible, if he’s truly determined to kneecap the economy in order to kneecap the incoming Biden administration. But the optics, at this point, would be absolutely terrible—even David Brooks, the king of moderate bothsidesism, is now writing fiery columns about how McConnell will be to blame if we enter the new year without more aid. Does the majority leader really want to be the man who sacrificed lives and livelihoods during a plague for a chance at partisan gain?

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